Exam 19: Flexible Budgets, Standard Costs, and Variance Analysis

Millonzi Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.There is no variable manufacturing overhead.The company's balance sheet at the beginning of the year was as follows: The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $236,250 and budgeted activity of 13,500 hours. During the year, the company completed the following transactions: a.Purchased 21,000 liters of raw material at a price of $8.70 per liter. b.Used 19,510 liters of the raw material to produce 5,300 units of work in process. c.Assigned direct labor costs to work in process.The direct labor workers (who were paid in cash)worked 4,570 hours at an average cost of $19.70 per hour. d.Applied fixed overhead to the 5,300 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed.Actual fixed overhead costs for the year were $225,150.Of this total, $165,150 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $60,000 related to depreciation of manufacturing equipment. e.Transferred 5,300 units from work in process to finished goods. f.Sold for cash 5,500 units to customers at a price of $108.90 per unit. g.Completed and transferred the standard cost associated with the 5,500 units sold from finished goods to cost of goods sold. h.Paid $27,000 of selling and administrative expenses. i.Closed all standard cost variances to cost of goods sold. Required: 1.Enter the beginning balances and record the above transactions in the worksheet that appears below.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet. 2.Determine the ending balance (e.g., 12/31 balance)in each account.

Gersbach Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The company has provided the following information: The company does not have any variable manufacturing overhead costs and it recorded the following variances during the year: The net operating income for the year is closest to:

Woodhouse Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.There is no variable manufacturing overhead.The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $121,500 and budgeted activity of 13,500 hours. During the year, the company completed the following transactions: a.Purchased 59,300 liters of raw material at a price of $5.70 per liter. b.Used 54,420 liters of the raw material to produce 18,800 units of work in process. c.Assigned direct labor costs to work in process.The direct labor workers (who were paid in cash)worked 17,020 hours at an average cost of $20.70 per hour. d.Applied fixed overhead to the 18,800 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed.Actual fixed overhead costs for the year were $137,200.Of this total, $30,200 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $107,000 related to depreciation of manufacturing equipment. e.Transferred 18,800 units from work in process to finished goods. f.Sold for cash 19,100 units to customers at a price of $47.80 per unit. g.Completed and transferred the standard cost associated with the 19,100 units sold from finished goods to cost of goods sold. h.Paid $100,000 of selling and administrative expenses. i.Closed all standard cost variances to cost of goods sold. Required: 1.Record the above transactions in the worksheet that appears below.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet.The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net)account which is abbreviated as PP&E (net). 2.Determine the ending balance (e.g., 12/31 balance)in each account.

When applying fixed manufacturing overhead to production, the Work in Process inventory account will increase (decrease)by:

The ending balance in the Raw Materials account will be closest to:

Cleland Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.There is no variable manufacturing overhead.The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $56,250 and budgeted activity of 12,500 hours. During the year, the company completed the following transactions: a.Purchased 29,400 gallons of raw material at a price of $5.20 per gallon. b.Used 25,520 gallons of the raw material to produce 18,300 units of work in process. c.Assigned direct labor costs to work in process.The direct labor workers (who were paid in cash)worked 8,850 hours at an average cost of $19.60 per hour. d.Applied fixed overhead to the 18,300 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed.Actual fixed overhead costs for the year were $41,650.Of this total, -$3,350 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $45,000 related to depreciation of manufacturing equipment. e.Transferred 18,300 units from work in process to finished goods. f.Sold for cash 20,600 units to customers at a price of $26.70 per unit. g.Completed and transferred the standard cost associated with the 20,600 units sold from finished goods to cost of goods sold. h.Paid $55,000 of selling and administrative expenses. i.Closed all standard cost variances to cost of goods sold. Required: 1.Compute all direct materials, direct labor, and fixed overhead variances for the year. 2.Record the above transactions in the worksheet that appears below.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet.The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net)account which is abbreviated as PP&E (net). 3.Determine the ending balance (e.g., 12/31 balance)in each account.

When recording the raw materials purchases in transaction (a)above, the Cash account will increase (decrease)by:

The ending balance in the Work in Process account will be closest to:

Milanese Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.There is no variable manufacturing overhead.The company's balance sheet at the beginning of the year was as follows: The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $186,000 and budgeted activity of 12,000 hours. During the year, the company completed the following transactions: a.Purchased 52,400 gallons of raw material at a price of $8.90 per gallon. b.Used 46,380 gallons of the raw material to produce 17,800 units of work in process. c.Assigned direct labor costs to work in process.The direct labor workers (who were paid in cash)worked 11,080 hours at an average cost of $18.90 per hour. d.Applied fixed overhead to the 17,800 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed.Actual fixed overhead costs for the year were $197,100.Of this total, $122,100 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $75,000 related to depreciation of manufacturing equipment. e.Transferred 17,800 units from work in process to finished goods. f.Sold for cash 17,700 units to customers at a price of $52.30 per unit. g.Completed and transferred the standard cost associated with the 17,700 units sold from finished goods to cost of goods sold. h.Paid $53,000 of selling and administrative expenses. i.Closed all standard cost variances to cost of goods sold. Required: 1.Compute all direct materials, direct labor, and fixed overhead variances for the year. 2.Enter the beginning balances and record the above transactions in the worksheet that appears below.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet. 3.Determine the ending balance (e.g., 12/31 balance)in each account.

Rhudy Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The direct labor standards for the company's only product specify 0.60 hours per unit at $20.00 per hour.During the year, the company started and completed 20,700 units.Direct labor employees worked 12,120 hours at an average cost of $18.90 per hour. Assume that all transactions are recorded on a worksheet as shown in the text.On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and PP&E (net).All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When recording the direct labor costs, the Work in Process inventory account will increase (decrease)by:

When the raw materials used in production are recorded in transaction (b)above, which of the following entries will be made?

Yordy Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.There is no variable manufacturing overhead.The company's balance sheet at the beginning of the year was as follows: The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $220,500 and budgeted activity of 31,500 hours. During the year, the company completed the following transactions: a.Purchased 48,700 kilos of raw material at a price of $9.30 per kilo. b.Used 43,020 kilos of the raw material to produce 30,800 units of work in process. c.Assigned direct labor costs to work in process.The direct labor workers (who were paid in cash)worked 28,820 hours at an average cost of $20.20 per hour. d.Applied fixed overhead to the 30,800 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed.Actual fixed overhead costs for the year were $208,600.Of this total, $124,600 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $84,000 related to depreciation of manufacturing equipment. e.Transferred 30,800 units from work in process to finished goods. f.Sold for cash 32,200 units to customers at a price of $46.60 per unit. g.Completed and transferred the standard cost associated with the 32,200 units sold from finished goods to cost of goods sold. h.Paid $155,000 of selling and administrative expenses. i.Closed all standard cost variances to cost of goods sold. Required: 1.Enter the beginning balances and record the above transactions in the worksheet that appears below.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet. 2.Determine the ending balance (e.g., 12/31 balance)in each account. 3.Prepare an income statement for the year.

Sousa Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The standards for direct materials for the company's only product specify 2.8 kilos per unit at $7.50 per kilo or $21.00 per unit.During the year, the company purchased 82,100 kilos of raw material at a price of $7.40 per kilo and used 78,020 kilos of the raw material to produce 27,900 units of work in process. Assume that all transactions are recorded on a worksheet as shown in the text.On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and PP&E (net).All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When the raw materials used in production are recorded, which of the following entries will be made?

When the purchase of raw materials is recorded in transaction (a)above, which of the following entries will be made?

When recording the raw materials purchases in transaction (a)above, the Raw Materials inventory account will increase (decrease)by:

When Raw Materials, Work in Process, and Finished Goods are recorded and carried at their standard cost, the fixed overhead applied to work in process is calculated by multiplying the predetermined overhead rate by the actual direct labor-hours worked.

When recording the direct labor costs in transaction (c)above, the Cash account will increase (decrease)by:

Floria Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.There is no variable manufacturing overhead.The company's balance sheet at the beginning of the year was as follows: The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $148,750 and budgeted activity of 17,500 hours. During the year, the company completed the following transactions: a.Purchased 68,500 gallons of raw material at a price of $5.60 per gallon. b.Used 64,990 gallons of the raw material to produce 30,900 units of work in process. c.Assigned direct labor costs to work in process.The direct labor workers (who were paid in cash)worked 14,550 hours at an average cost of $19.00 per hour. d.Applied fixed overhead to the 30,900 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed.Actual fixed overhead costs for the year were $160,350.Of this total, $78,350 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $82,000 related to depreciation of manufacturing equipment. e.Transferred 30,900 units from work in process to finished goods. f.Sold for cash 27,200 units to customers at a price of $33.50 per unit. g.Completed and transferred the standard cost associated with the 27,200 units sold from finished goods to cost of goods sold. h.Paid $79,000 of selling and administrative expenses. i.Closed all standard cost variances to cost of goods sold. Required: 1.Enter the beginning balances and record the above transactions in the worksheet that appears below.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet. 2.Determine the ending balance (e.g., 12/31 balance)in each account.

The net operating income for the year is closest to:

Isaman Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The direct labor standards for the company's only product specify 0.60 hours per unit at $21.50 per hour.During the year, the company started and completed 11,500 units.Direct labor employees worked 7,500 hours at an average cost of $19.50 per hour. During the year, the company started and completed 11,500 units.Direct labor employees worked 7,500 hours at an average cost of $19.50 per hour. Assume that all transactions are recorded on a worksheet as shown in the text.On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and PP&E (net).All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When the direct labor cost is recorded, which of the following entries will be made?